SOUTH BRONX,
SDNY, August 20 – With
Comptroller of the Currency
Joseph Otting moving to
undermine the US Community
Reinvestment Act, in June 2019
he denied access to documents
about whom he meets with which
Inner City Press requested
back in January 2019. This
while he had made the OCC
start rejecting timely CRA
comments on mergers (like that
of Chinatown FSB, here)
and on Fifth Third's lateral
move to the less regulated OCC
charter, asserting that he has
unfettered discretion to
consider such comments.

Now in a
promotional brochure about his
attack on CRA, Otting has
misstated what the CRA statute
says, and significantly so.
His brochure said that the law
requires the regulators to
"consider the CRA RATING in
connection with certain
licensing applications." He
thereby promises "greater
predictability to certain
licensing applications."
Uploaded by Inner City Press
on Scribd here.

In
fact, the
process is
that CRA
issues are
considered on
merger and
charter
conversion and
other
applications,
not just
ratings. That
is a safe harbor, something
repeatedly considered, fought
off and rejected. Now
fraudulent comment generator
Otting is simply changing the
law. We'll have more on this.
And on this:

On August
21 Otting has arranged a bus
tour in New York City - not of
the South Bronx or East New
York but of Jamaica, Queens.
Joining him after the tour
will be US Congressman Gregory
Meeks, whom Inner City Press
covered on August 20 as he
denounced the Trump
Administration's "public
charge" ruling in a press
conference in Foley Square.
Periscope video here.
Why is he engaging with
Trump's Otting? Why is anyone
here? We'll have more on this.
And this:

On August 9
Otting issued an Orwellian
summary of a visit to Atlanta
ostensibly to help the CRA be
more transparent: "WASHINGTON
— Comptroller of the Currency
Joseph Otting, today visited
Atlanta to tour neighborhoods
that have benefitted from
activities encouraged by the
Community Reinvestment Act
(CRA) and areas that could
benefit from additional CRA
activity. “Today, we saw
what great things can be
accomplished when banks, civil
rights organizations,
nonprofit groups, and local
advocates work together to
meet the needs of their
communities,” Comptroller
Otting said following the
tour. “We also discussed how
current CRA regulations
hamstring efforts that could
revitalize these areas and
bring even more lending,
investment, and service to
where they are needed
most.” The Comptroller
was joined on the tour by John
Hope Bryant, CEO and Founder
of Operation HOPE, Ambassador
and former Atlanta Mayor
Andrew Young, and
representatives from area
community groups,
redevelopment organizations,
and banks. The group began
their tour of Atlanta from the
Martin Luther King Sr.
Community Resources
Collaborative and visited a
HOPE Inside office at [a
shopping center]... “The
places we visited today
confirm how CRA has been a
force for good for the past 40
years,” the Comptroller said.
“Our goal now is to strengthen
CRA so that it continues to
encourage the flow of billions
of dollars into our
communities and neighborhoods
each year. We can modernize
CRA regulations to encourage
banks to do even more by
clarifying what counts for CRA
credit, updating where
activity qualifies, making
evaluations of bank CRA
performance more objective,
and reporting results in a
more timely and transparent
manner.” More
transparent? From a man who
withholds all his information,
after generating fake comments
to support the cash out merger
of One West when he ran it?
And which unnamed banks were
along on this tour?

After
first denying a Freedom of
Information Act fee waiver for
these documents, and now for
all bank merger applications
is obvious retaliation, on
June 20 the OCC wrote to Inner
City Press:

"Dear Mr.Lee:
This is in response to your
letter dated January 16, 2019,
which was received in my
office on January 17, 2019 for
processing under the Freedom
of Information Act (FOIA), 5
U.S.C. 552. You requested
copies of records sufficient
to show all of Comptroller
Otting's scheduled meetings,
appointments, and scheduled
events from the date he became
Comptroller to the date of
your response including but
not limited to Outlook
calendar entries and daily
briefing books for Comptroller
Otting on those dates. You
seek records of any kind,
including paper records,
electronic records,
audiotapes, videotapes,
photographs, data, and
graphical material. Our
determination concerning your
request is as follows:

1. Mr. Otting’s
Calendar is published on the
OCC’s Website in the
Electronic Reading Room
located at www.occ.gov.
Certain entries have been
deleted under the authority of
5 U.S.C. 552(b)(2) and 12
C.F.R. (b)(2), related solely
to the internal personnel
rules and practices of an
agency which covers
confirmation numbers, ticket
numbers, dialin numbers and
PIN codes for telephone
conferences; 5 U.S.C.
552(b)(5) and 12 C.F.R.
4.12(b)(5) inter-agency or
intra-agency memorandums or
letters which would not be
available by law to a party
other than an agency in
litigation with the agency
which are considered
deliberative in nature; 5
U.S.C. 552(b)(6) and 12 C.F.R.
4.12(b)(6), personnel and
medical files and similar
files the disclosure of which
would constitute a clearly
unwarranted invasion of
personal privacy which covers
personal, non-government
issued telephone cell phone
numbers; and, 5 U.S.C. 552
(b)(8) and 12 C.F.R.
4.12(b)(8), contained in or
related to examination,
operating, or condition
reports prepared by, on behalf
of, or for the use of an
agency responsible for the
regulation or supervision of
financial institutions;.
2. Briefing books or materials
submitted to the Comptroller
in preparation for meetings
appearing on his calendar and
are marked “MATERIALS
ATTACHED” are withheld under
the authority of 5 U.S.C.
552(b)(5) and 12 C.F.R.
4.12(b)(5) inter-agency or
intraagency memorandums or
letters which would not be
available by law to a party
other than an agency in
litigation with the agency,
which is consistent with
Department of Justice policy.
3. The OCC does not capture
audiotapes or videotapes of
meetings.
4. Telephone messages made to
the Comptroller are also not
captured.
5. The OCC does not maintain
transcripts.
6. Handwritten notes are not
maintained by the Comptroller
or the OCC. 7. The OCC does
not sweep the personal email
accounts of its
employees.
8. A Vaughan index is not
required to be produced at the
administrative level of
processing FOIA requests.

Once you have
reviewed the calendars for Mr.
Otting and have identified
specific topics you you’d like
to review, please submit a
targeted FOIA request and we
will once again search our
records. Please note that you
requested a fee waiver that I
denied. This was because
the basis for your fee waiver
did not constitute an official
reason as set forth in our
regulations to justify a fee
waiver. Upon receive a
request for possibly vast
amounts of data, you need to
adequately justify any such
request for a fee
waiver. Due to the
volume of requests the OCC is
now receiving, each request
for a fee waiver is being
scrutinized very closely and
such waivers are not
automatic.
Additionally, keep in mind
that the less targeted a FOIA
request is, and the possible
large amount of data that must
be gathered and reviewed, the
less likely a request for
expedited processing will be
granted. It is just
physically impossible."

Impossible for an ex-banker
turned regulator, gone rogue.
Otting has also denied access
to documents about the
application to the OCC for
WSFS to acquire Beneficial
Bank and close 25 branches.
Inner City Press requested the
records months ago, along with
a request for a waiver of fees
as the other Federal bank
regulators grant it and as the
OCC has until now.

But Otting
is different. First he denied
a fee waiver on Inner City
Press' request for his
calendar. Then he relented on
that, after Inner City Press
citing case law and precedent.
But seemingly in retaliation,
he has denied access to a
merger application subject to
public comment. Denial here
on Scribd.

And now,
dated June 11 but e-mailed
later, a final denial, after
putting Inner City Press
through three rounds of more
and more detailed
argumentation - just to waste
its time until long after
Otting rubber stamped the
merger - accusing Inner City
Press of not "explaining how
the application submitted by
WSFS would contribute
significantly to the public’s
understanding of the
operations or activities of
the OCC. As such, your request
for a fee waiver is denied.
Until you contact the OCC
Disclosure Services office
with assurance that you will
pay associated fees, FOIA
request # 2019-00206 will not
be processed."

So the OCC
thinks it can hinder public
review and public comment by
changing the law and its own
pre-Otting practice.

On 1 June
2019 the most recent OCC
Weekly Bulletin of bank merger
applications on which the
comment periods are 30 days is
from May 4. Inner City Press
tweeted photo here.
That is to say, the
applications are being hidden
until the comment period
closes.But we'll have more on
this, now that Otting's OCC
has fully shown itself.

Ironically
the grounds cited for the FOIA
fee waiver denial is that
releasing this information
about a merger subject to
public comment would not
increase the public's
understanding. This shows
Otting contempt for CRA - and
for the public. Now it's ever
worse. His claim is that while
he might have to wave fees for
OCC document, he can withhold
/ hinder the release of the
bank's underlying application.
But how can the public access
what his OCC does on the
application, without seeing
the application? In a Friday
afternoon dump on May 17 this
came in from the OCC: "Mr.
Lee, I am writing to
follow-up on the FOIA Appeal
you submitted regarding the
fee waiver denial for request
2019-00206-F. In the
denial, Mr. Frank Vance
identified his concern about
lack of information for the
third public interest factor –
contribution to public
understanding. However,
on appeal, I am providing you
an opportunity to address the
first factor – how the
requested records specifically
concern identifiable
operations or activities of
the government and the second
factor – how the requested
records are likely to
contribute to an understanding
of specific government
operations or
activities. In your
appeal you assert that
disclosure of the information
sought will document and
reveal the activities of the
federal government, including
how the OCC reviews CRA and
branch closing aspects of the
merger between WSFS and
Beneficial. However, the
records you requested are for
the withheld portions of the
application filed by
WSFS. Your request does
not seek any records of OCC
action before or after
receiving the WSFS
application. See
Judicial Watch, Inc. v. Reno,
No. 00-0723, 2001 WL 1902811,
at *10 (D.D.C. Mar. 30, 2001)
(upholding agency's assessment
of fees, reasoning that while
agency's response to citizen
letters regarding Cuban emigré
Elian Gonzales would likely
contribute to understanding of
agency actions, incoming
citizen letters to agency on
that topic do not).
Emphasis added to DOJ
summary. If you would
like to supplement your appeal
with additional information
that demonstrates how the WSFS
application itself contributes
significantly to public
understanding about the
operations or activities of
the OCC, please do so." We'll
have more on this. Inner City
Press initially filed this
appeal with Otting, et al.:

"Dear Comptroller
Otting:

Inner City Press
traditionally has received fee
waivers from the Office of the
Comptroller of the Currency
under 5 U.S.C. §
552(a)(4)(A)(iii) and 12
C.F.R. § 4.17. Waivers were
granted on the basis of
similar or identical language
contained in the instant
Freedom of Information Act
(FOIA) request, which is now
the subject of OCC’s waiver
rejection. Outrageously, on
Inner City Press' FOIA request
for the portions of the WSFS -
Beneficial merger application
that the applicants
unilaterally requested
confidential treatment for,
your FOIA Manager Frank Vance
writes:

"Concerning
the third consideration,
contribution to public
understanding, we examined
whether or not disclosure of
the requested records would
contribute to the
understanding of the public at
large, as opposed to the
understanding of the requester
or a small number of
interested persons. In
other words, we considered
whether or not you
demonstrated how contribution
to public understanding
outweighs personal benefit to
you. I find that you did
not demonstrate this
component; therefore, you did
not satisfy the regulatory
requirement of 12 C.F.R.
4.17(b)(4)(i). In light
of this, there is no need to
analyze your justification
with respect to 12 C.F.R.
4.17(b)(4)(ii).
"

So you are
claiming that the public is
not interested in, and should
be constrained in access, the
bank merger applications on
which the public has a right
to comment. You are claiming
that to get any OCC review of
the often outrageously
overbroad requests for
confidential treatment of the
banks you supervise, the
public has to pay untold fees.
This is a new low, and Inner
City Press is
appealing.
Inner City Press Is Eligible
for a Fee
Waiver
In accordance with 5 U.S.C. §
552(a)(4)(A)(iii) and 12
C.F.R. § 4.17, Inner City
Press is eligible for, and
requests, a waiver of fees
associated with processing its
request for records. The
subject of this request—the
review of a merger to close at
least 25 bank branches --
concerns the operations of the
federal government, and the
disclosures will likely
contribute to a better
understanding of relevant
government procedures by the
general public in a
significant way. Moreover, the
request is primarily and
fundamentally for
non-commercial
purposes.
Inner City Press requests a
waiver of fees because
disclosure of the requested
information is “in the public
interest because the
disclosure . . . [i]s likely
to contribute significantly to
public understanding” of
government operations or
activities.

Specifically,
the disclosure of the
information sought under this
request will document and
reveal the activities of the
federal government, including
how your OCC reviews the CRA
and branch closing aspects of
the
merger.
As discussed below, Inner City
Press has both the ability and
the intention to effectively
convey the information it
receives to the
public.
Inner City Press does not have
a commercial interest in the
requested information. This
request is primarily and
fundamentally for
non-commercial purposes. Inner
City Press does not have a
commercial purpose and the
release of the information
requested is not in its
financial interest. Inner City
Press’s mission is to engage
in cutting-edge investigative
reporting focused, fair
lending, development, and
government accountability
advocacy. Core to its mission
is to educate the public about
government activities and to
ensure the accountability of
government officials. Inner
City Press uses the
information gathered, and its
analysis of it, to educate the
public through reports, press
releases, or other media. It
also makes materials it
gathers available on its
public website and promotes
their availability on social
media platforms. Inner City
Press has demonstrated its
commitment to the public
disclosure of documents and
creation of editorial content.
For example, Inner City
Press’s website contains
dozens of articles describing
the operations of the federal
government from a unique
perspective, including about
the OCC: In
SDNY FreddieMac Via FHFA of
Otting Says Its Negligent
Late Objection Is Fine As
Otting Lawless

Inner City Press’s website
contains many more examples
demonstrating its ability and
intention to inform the public
about government activities,
including specifically related
to how the subject of the
instant FOIA request spent his
time at
OCC.
Accordingly, Inner City Press
qualifies for a fee
waiver.

Significantly,
well before this outrageous
denial which now longer keeps
secret the requested
documents, even the OCC wrote
"your correspondence of March
8 is more robust and sets
forth with reasonable
specificity the grounds to
justify the OCC's granting of
the fee waiver. Therefore,
your request for a fee waiver
with respect to FOLA request
2019-00104 is granted. The
OCC's Disclosure Services
office will remove the matter
from "Hold" status and proceed
to process the
request."

Of course, even
in that case [about your /
Otting's schedule] in the two
month since our letter we have
not received a single document
from your
OCC.

There can be no
doubt that Inner City Press
qualifies for a waiver based
on the foregoing. Moreover,
Inner City Press’s long track
record of fee waivers is
further evidence of our
current eligibility. In
particular, we have
demonstrated repeatedly our
intent and ability to inform
the public about government
operations and that our
requests for information are
not primarily in our
commercial
interest.

We find your
OCC's FOIA and other practices
outrageous and demand
expeditious ruling on this
appeal and release of the
already long delayed
documents.
Matthew Lee, Esq., Executive
Director Inner City Press /
Fair Finance Watch." Watch
this site.

Otting has
been sued again for offering a
CRA-lax fintech bank charter.
The lawsuit, filed September
14 by the New York State
Department of Financial
Services, says Otting "puts
New York financial
consumers—and often the most
vulnerable ones—at great risk
of exploitation by
federally-chartered entities
improperly insulated by New
York law. The OCC’s reckless
folly should be stopped." It's
Vullo v Office
of the
Comptroller of
the Currency,
18-cv-8377,
U.S. District
Court,
Southern
District of
New York. On
May 2, SDNY Judge Victor
Marrero allowed DFS' suit to
go forward. He wrote, "As a
result of the Fintech Charter
Decision, New York State's
regulations for over "600
non-bank financial services
firms" are all at risk of
becoming null and void.
(Complaint ~ 10.) Of course,
certain steps, namely the
application for, and then the
granting of, an SPNB charter
must occur before a fintech
firm can flout New York's
laws. But those steps do not
stymie DFS's standing. For
both steps, DFS benefits from
the supposition that the
government enforces and acts
on its recent, non-moribund
laws. See Hedges v. Obama, 724
F.3d 170, 19 7 ( 2d Cir. 2
013) . Specifically, DFS
alleges that OCC has invited
fintech companies to its
offices to discuss SPNB
charters, potentially
indicating at least some
demand for, and interest in,
such charters." Sounds like
Otting, the secret meetings of
the type the OCC has YET to
disclose in response to Inner
City Press' FOIA request which
was delayed by the OCC
disputing fee waivers as it
never had before, We'll have
more on this. The OCC's
spokesman Bryan
Hubbard had
said
the agency "is confident in
its authority to grant
national bank charters
including special purpose
national bank charters to
companies that are engaged in
the business of banking, meet
the qualifications for
becoming a national bank, and
apply to conduct business as
part of the federal banking
system. The agency will
vigorously defend that
authority, but will not
comment on pending or
potential litigation.” Otting,
as we've noted, as a pre-OCC
history of generating dubious
comment supporting mergers
like his OneWest with
CIT. A showdown in the
Senate scheduled for September
13 has been pushed back more
than two weeks to October 2.
Here is the notice: "NEW DATE:
TUESDAY, OCTOBER 2, 2018
ORIGINAL DATE (POSTPONED):
THURSDAY, SEPTEMBER 13, 2018
Full Committee Hearing:
“Implementation of the
Economic Growth, Regulatory
Relief, and Consumer
Protection Act.”
Witnesses: The Honorable
Joseph M. Otting, Comptroller,
Office of the Comptroller of
the Currency; The Honorable
Randal K. Quarles, Vice
Chairman for Supervision,
Board of Governors of the
Federal Reserve System; The
Honorable Jelena McWilliams,
Chairman, Federal Deposit
Insurance Corporation; and The
Honorable J. Mark McWatters,
Chairman, National Credit
Union Administration.
Time and Location: 10:00 a.m.
in room 538 of Dirksen
Senate Office Building."
Meanwhile, Otting's OCC wrote
to Fair Finance Watch
rebuffing Inner City Press'
straight forward request for
information and stating on the
"Application for KleinBank,
Chaska, MN to Merge with and
into Old National Bank,
Evansville, IN, Dear Mr. Lee,
Esq.: The Office of the
Comptroller of the Currency
(OCC) acknowledges receipt of
your comments regarding the
above referenced application.
The comment letter requests
the OCC (i) extend the public
comment period and (ii) hold a
public hearing on the
application. The OCC has
decided not to extend the
comment period." Klein settled
charges of racial
discrimination, quite
recently. We'll have more on
this. #TreasureCRA. With the
Consumer Financial Protection
Bureau under Mick Mulvaney
moving to undermine liability
for disparate impact
discrimination, on September 7
a new, smaller and less
consumer representative Consumer
Advisory Board
was
announced. Now on September 10
this, from members of the
former CAB that was disbanded
by Mulvaney in June: "We are
disappointed that the current
administration of the CFPB
chose to only appoint nine
members to this new CAB. While
each of the individual members
is qualified in her or his own
right, the fact that there are
so few of them means that
Acting Director Mulvaney’s CAB
lacks sufficient diversity and
depth of perspective. There
are only 2 consumer advocates,
whereas there were at least 8
advocates on the former 25
member CAB. Ironically, there
are no large financial
institutions, major credit
card providers, or debt
collectors on this new CAB.
While these sectors probably
have other opportunities for
access with the CFPB, one of
the most valuable aspects of
the recently disbanded CAB was
that it provided a forum for
fruitful and productive
conversations among a variety
of stakeholders in consumer
finance, which often generated
valuable insights for the
Bureau and the CAB members.
This will be missing from the
new CAB. The lack of a
multitude of perspectives is
ironic given that a stated
reason for disbanding the
former CAB was to increase the
diversity of viewpoints on the
Board.
“We are also disappointed that
Acting Director Mulvaney and
his appointees have chosen to
limit the service of these CAB
members to one year instead of
three years as with previous
CAB members. Because the CAB
meets only a few times a year,
it takes one year for members
to become familiar with the
CFPB and other CAB members,
and to get up to speed. New
members will be just getting
started when their terms end.
One year does not permit
members to provide the type of
rich feedback and perspective
that traditionally has been
the role of the CAB.
As consumer advocates and
academics with decades of
experience among us, we are
committed to continue working
to ensure that consumer
protection and fair market
practices are given due
priority. We must ensure that
the most financially
vulnerable Americans are
protected from the worst
abuses of predatory consumer
practices.
Ann Baddour, former chair of
the disbanded CAB and director
of the Fair Financial Services
Project of Texas Appleseed
stated that “We hope the new
panel builds on the work of
the previous boards, and
ensures that the CFPB stays on
track in meeting its consumer
protection mission. We are
happy to be a resource to them
in their important work.”
Ann Baddour, Texas Appleseed;
former Consumer Advisory Board
Chair
Lynn Drysdale, Jacksonville
Area Legal Aid, Inc.; former
Consumer Advisory Board Vice
Chair
Kathleen Engel, Suffolk
University Law School
Ruhi Maker, Empire Justice
Center
Lisa Servon, University of
Pennsylvania
Chi Chi Wu, National Consumer
Law Center
Josh Zinner, Interfaith Center
on Corporate Responsibility
(Affiliations for
informational purposes only)."

Meanwhile state
Attorneys General from New
York and 13 other states have
delivered a letter of
opposition, on September 5. NY
AG Barbara Underwood said, "the
Equal Credit
Opportunity
Act was
enacted
because of our
country’s
sordid history
of credit
discrimination
— and it’s
unbelievable
that the CFPB
is considering
refusing to
use it to
protect
consumers."
The letter signed by the
attorneys general of North
Carolina, California,
Illinois, Maine, Maryland,
Massachusetts, Minnesota, New
Jersey, New York, Oregon,
Rhode Island, Vermont,
Virginia and the District of
Columbia stated that they "will
not hesitate
to uphold the
law if CFPB
acts in a
manner
contrary to
law with
respect to
interpreting
ECOA." We'll
have more on
that - and
this: the
US Office of the Comptroller
of the Currency Joseph Otting
on August 28 began a process
to weaken and take the
community out of the 1977
Community Reinvestment Act.
Now in September he has given
conditional approval to a
fintech bank, Varo Bank of
Varo Money, which will include
only Salt Lake City, Utah in
its CRA assessment area. The
CEO is Colin Walsh, previously
of scandal plagued Wells
Fargo. But will the FDIC,
which has not for now joined
Otting's crusade, hand out
deposit insurance? On August
29 when the OCC purported to
solicit public comments for
the CRA evaluation of banks in
the fourth quarter of 2018 and
even first quarter of 2019,
the OCC's notice did not even
mention or link to Otting's
proposal to change the CRA. Here
is what the OCC e-mailed out
on August 29. So the community
is not informed - but the
industy is. Even open sources
are full of banks and their
lobbying groups celebrating
and preparing to support
Otting's proposal(s). From
Louisiana, there is this:
"GAME FACE ConsumerBankers GC
Steve Zeisel is ready for
today’s Membership Call
regarding the @USOCC ANPR on
#cra. #intense. #focus." On
the other hands, there's this,
on and of which we'll have
more. The protagonist, akin to
Scott Pruitt until recently at
the US Environmental
Protection Agency, is Joe
Otting. While Reuters blandly
noted that he is "a former
banker," the bank he headed,
OneWest, was accused of
predatory lending and when its
acquisition by the CIT Group
was challenged
by Fair Finance Watch, CRC and
others Otting arranged for
seemingly counterfeit or
compelled comments supporting
the merger. In this light,
Question 11 of his "Advanced
Notice of Proposal Rulemaking"
or ANPR
is noteworthy: "11. How can
community involvement be
included in an evaluation
process that uses a
metric-based framework?" How,
indeed. Here's what Otting
wrote as a banker, already
long public, in support of his
merger:

We were excited to
announce on July 21,
2014, that IMB HoldCo
LLC, the parent company
of OneWest Bank entered
into a merger agreement
with CIT Group Inc. As
part of the applications
for regulatory approval
of the transaction, our
regulators are
interested in the
perspectives of the
public. We are writing
you to seek your support
of the Bank and pending
merger. This merger, if
approved, would create
the largest bank
headquartered in
Southern California with
a full suite of banking
products and services,
which will allow us to
better serve our
customers. We would
retain and grow jobs and
are committed to
continuing and expanding
our efforts to serve the
economic and development
needs of our community.
I would like to ask you
to take a moment to
click on the link below
and submit a letter of
support adding any of
your own words or
thoughts.

Please submit your
letter by clicking here,
or by visiting our
website atwww.OneWestBank.com/merger-support(if
the link isn't clickable
or part of the link is
cut off, please copy and
paste the entire URL
into your browser's
address bar and press
Enter)

Thank you for your
support. Best
wishes for a successful
2015 and please call on
me if I can ever be of
assistance.

There
will be fight-back, under
NCRC's TreasureCRA
campaign. Watch this site -
including on actual
enforcement of CRA. A bank
that was sued by the US
Justice Department in 2017 for
redlining and discrimination
is trying to sell itself to
Old National, and Fair Finance
Watch has formally challenged
it under the Community
Reinvestment Act in a filing
to the Federal Reserve on the
last day of the comment
period. From the filing: "This
is a timely first comment
opposing the Applications of
Old National Bancorp to merge
with Klein Financial, Inc.,
Chaska, Minnesota, and thereby
indirectly acquire KleinBank,
also of Chaska, Minnesota.

As an initial
matter, this is a request that
the FRS immediately send by
email to Inner City Press all
non-exempt portions of the
applications / notices for
which the Applicants have
requested confidential
treatment.

It was
only last year that
“the U.S. Justice Department
accused Chaska-based KleinBank
of redlining, the illegal
practice of denying mortgage
loans to minority residents.
Lawyers from the department's
civil rights division said
KleinBank engaged in
discrimination in Minneapolis
and St. Paul by failing to
market its services and open
bank branches in areas
dominated by minorities.
KleinBank, which operates 21
branches in mostly outer-ring
suburbs of the Twin Cities, is
one of Minnesota's largest
community banks. 'KleinBank's
discriminatory practices …
have been intentional and
willful, and implemented with
reckless disregard for the
rights of individuals on the
basis of their race and/or
national origin,' the
complaint said.”

Now,
attempting to cash in / out of
that discrimination, Klein
Bank seeks to sell, to Old
National which has its own
insufficient records. Fair
Finance Watch has been
tracking Old National:
In 2012 in its Evansville
(Headquarters) MSA for
conventional home purchase
loans back in 2012, Old
National Bank made only six
such loans to African
Americans. In 2016, the most
recent year for which data is
available, Old National made
only THREE such loans to
African Americans. In
Table 4-1, in 2012 it made
three such loans to African
Americans. In 2016 this fell
to one.
Old National has gotten worse.
It cannot be allowed to
acquire Klein so recently
prosecuted for discrimination.
(Separately, note that
in Evansville MSA in 2016, Old
National reported a 100%
approved and originated rate
for both African Americans and
Latinos, until in other MSAs -
this is not credible,
presumptively indicates
pre-screening and should be
investigated in connection
with this Klein proposal.)

For refinance
loans in Evansville in 2012,
Old National made eight such
loans to African Americans.
This fell to four in 2016.
For home
improvement loans in the
Evansville MSA, Old National
in 2012 made five such loans
to African Americans. This
fell to four in 2016.
For refinance
loans in Indianapolis in 2012,
Old National made 18 such
loans to African Americans.
This fell to a mere seven in
2016, when Old National denied
62% of applications from
African Americans (see
above).
Old National has gotten much
worse. It cannot be allowed to
acquire Klein so recently
prosecuted for discrimination.
Also troubling
regarding Old National is its
history of branch closings.
According to its hometown
newspaper the Evansville
Courier News & Press
"since 2004 Old National
has purchased 175 banking
offices, either through
acquiring smaller financial
institutions or buying
selected office locations. Old
National has also shed 140
banking offices by
consolidating 121 locations
and by selling 19 other
offices."
Old National is a bank
with a disparate lending
record that specializes in
buying and closing bank
branches - now it seeks to
acquire Klein Bank prosecuted
only last year for redlining.
ICP is requesting
evidentiary hearings and that
this proposed acquisition, on
the current record, not be
approved. There is no public
benefit." We'll have more on
this - and this: the US
Comptroller of the Currency
Joseph Otting, who said he's
never witnessed discrimination
and is poised to attack
the Community Reinvestment
Act, yesterday announced he'll
be giving out "fintech" bank
charters. CRA won't apply.
Instead, the announcement
vaguely says, "The
expectations for promoting
financial inclusion will
depend on the company’s
business model and the types
of planned products, services,
and activities." But what to
expect of the OCC of Otting?
When at OneWest, he arranged
for Astro-turf and even fake
public comments supporting its
acquisition by the CIT Group.
In other comment period news,
we like it when banks
challenge each others. Like
this, today: "The Independent
Community Bankers of America
(ICBA) today called on the
Federal Deposit Insurance
Corp. to deny Nelnet Bank’s
deposit insurance application
for its proposed industrial
loan corporation and impose a
two-year moratorium on future
ILC applications. Like the
since-withdrawn applications
of SoFi Bank and Square,
Nelnet’s is designed to avoid
the legal restrictions of the
Bank Holding Company Act, ICBA
wrote in a letter to the
agency. “The ILC loophole
allows commercial interests to
own full-service banks while
avoiding the legal
restrictions and regulatory
supervision that apply to
other bank holding
companies—threatening the
financial system and creating
an uneven regulatory playing
field,” ICBA President and CEO
Rebeca Romero Rainey said. “To
support a safe and sound
financial system and to
maintain the separation of
banking and commerce, the FDIC
should impose a two-year
application moratorium and
Congress should close the ILC
loophole for good. Our
deposit-insurance system was
created to protect
depositors—not commercial
firms.” Regulation under the
Bank Holding Company Act
entails consolidated
supervision of the holding
company by the Federal Reserve
and restricts the activities
of the holding company and its
affiliates to those that are
closely related to banking.
Because of a loophole in the
law, companies that own ILCs
are not subject to BHCA
supervision even though the
ILC charter is a full-service
banking charter. As a result,
companies that own
FDIC-insured ILCs are not
subject to consolidated
supervision and can engage in
non-banking commercial
activities. Citing several
previous moratoriums on ILC
applications, ICBA’s letter
notes that Nelnet Bank is
applying as an ILC—not a
commercial bank—so its parent
company can retain its
commercial activities. These
include investing in
start-ups, and maintaining
telecommunications, investment
and sports-software
businesses. Nelnet Inc. should
be subject to the same
restrictions and supervision
as any other bank holding
company, ICBA wrote."
Later on July 31 New York
regulator Maria T. Vullo
issued this: "The New York
State Department of Financial
Services fiercely opposes the
Department of Treasury’s
endorsement of regulatory
‘sandboxes’ for financial
technology companies. The idea
that innovation will flourish
only by allowing companies to
evade laws that protect
consumers, and which also
safeguard markets and mitigate
risk for the financial
services industry, is
preposterous. Toddlers play in
sandboxes. Adults play
by the rules. Companies that
truly want to create change
and thrive over the long-term
appreciate the importance of
developing their ideas and
protecting their customers
within a strong state
regulatory framework. DFS also
strong opposes today’s
decision by the Office of the
Comptroller of the Currency to
begin accepting applications
for national bank charters
from nondepository financial
technology (fintech)
companies. DFS believes
that this endeavor, which is
also wrongly supported by the
Treasury Department, is
clearly not authorized under
the National Bank Act. As DFS
has noted since the OCC’s
proposal, a national fintech
charter will impose an
entirely unjustified federal
regulatory scheme on an
already fully functional and
deeply rooted state regulatory
landscape." Sounds good -- but
NYS DFS has for example
allowed First Republic Bank to
redline The Bronx, and hasn't
even confirmed receipt of a
timely comment opposing it.
We'll have more on this - and
on this: First Republic Bank,
which excludes The Bronx as
well as Brooklyn and Queens
from its assessment area while
funding outer borough
slumlords, has applied to New
York bank regulators to open
another branch in Manhattan.
Fair Finance Watch has filed
opposition, along with Inner
City Press, also citing FRB's
record of displacement in
California: On behalf of
Inner City Press / Fair
Finance Watch (ICP), this is a
timely comment opposing the
application by First Republic
Bank to open a new insured
deposit-taking facility at 329
Tenth Avenue, Borough of
Manhattan, City of New York
10001. First Republic Bank is
engaged in redlining. Its
branches in New York are
entirely in Manhattan, and
only in the most affluent
sections. It excludes from its
CRA Assessment Area, in their
entirety, the boroughs of The
Bronx, Brooklyn, Queens and
Staten Island. This is an
outrage, and that ICP had
thought was no longer allowed
by regulars. (ICP previously
challenged and got changes
such exclusionary Assessment
Areas at Bank of New York,
HSBC, predecessors of Bank of
America and others).
Cynically, while excluding the
outer boroughs from its
assessment area, First
Republic Bank does business
with landlords who have been
described as slumlords, such
as Moshe Piller. See, e.g.,
Daily News, “Moshe Piller,
owner of the Hunts Point Ave.
building in the Bronx
where two children died when a
faulty radiator spewed steam
into their bedroom.” (ICP
also takes
note of the
San Francisco
analysis of
its fellow
NCRC member
CRC). Fair
Finance Watch has reviewed
First Republic Bank's most
recent publicly available HMDA
data for the NYC MSA and, for
home purchase loans, find that
FRB made 283 such loans to
whites, and only three each to
Latino and African
American applicants. Its
denial rate disparity is
astronomical: 20% denial rate
for African American, less
than 1% for whites. Again:
First Republic Bank is a
redliner. For all of these
reasons, First Republic Bank's
applications should be
denied." We'll have more on
this - and this:
People's
United Bank,
which has
applied to buy
Farmington
Bank in
Connecticut,
has become
more and not
less disparate
in its
lending, as
shown by
analysis of
U.S. Home
Mortgage
Disclosure Act
data by Fair
Finance Watch
submitted to
the US Office
of the
Comptroller of
the Currency
by Inner City
Press in
opposition to
the proposed
merger. From
the timely
July 27
filing: "This
is a timely
first comment
opposing and
requesting an
extension of
the OCC's
public comment
period on the
Application by
People's
United Bank to
acquire
Farmington
Bank.
In the
the New York
City MSA in
2014, People's
United made 82
home purchase
loans to
whites and
NONE to
African
Americans or
Latinos.
We note that
People's has
been in these
markets since
2010 -- NOT
“recently” --
and that New
York City is
not the “Lower
Hudson Valley.
Then we found
that in 2015
in the New
York City MSA,
People's
United made
110 home
purchase loans
to whites and
only ONE to an
African
American and
only four to
Latinos.
In
2016, the most
recent year
for which HMDA
data is
publicly
available,
People's got
even worse: in
the NYC MSA it
made 144 home
purchase loans
to whites
(more than in
2015) and
still only one
to an African
American.
For refinance
loans in the
New York City
MSA in 2014,
People's
United made 24
loans to
whites, 1 to
an African
American and
four to
Hispanics. By
2016, it was
again worse:
165 loans to
whites and
only two to
African
Americans.
This is
systematic
redlining;
this proposed
acquisition
could not
legitimately
be approved
and People's
United should
be referred
for
prosecution
for redlining
by the
Department of
Justice and
CFPB.
People's
United record
is hardly
sufficient in
the Hartford
MSA where it
now proposes
to acquire
Farmington
Bank. In 2016
in the
Hartford MSA,
People's
United made
162 home
purchase loans
to whites and
only 10 to
African
Americans and
only 14 to
Latinos.
Again,
this is
systematic
redlining;
this proposed
acquisition
could not
legitimately
be approved
and People's
United should
be referred
for
prosecution
for redlining
by the
Department of
Justice and
CFPB.
In this
context, the
comment period
should be
extended so
that public
evidentiary
hearings can
be held, and
the
application
should be
denied."

***

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